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9 Incredible Trading Quotes to Motivate You for the Week Ahead

Posted by TopstepTrader on April 09, 2018

Markets are up and roaring for another week — with everyone's ears perked up listening for how the trade war / not trade war situation plays out between the United States and China. 

But while you can't control what President Donald Trump or President Xi Jinping do, you can control your entries, stops and exits. Here are some of our favorite quotes to get you motivated this week.

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Topics: Trading Basics, Trading Lessons, Market Wizards, Forex, Futures

Two Amazing Trading Lessons from “the Cal Ripken of Hedge Funds”

Posted by TopstepTrader on March 13, 2018

Comparing a trader to a baseball legend may seem odd at first. You might be more likely to look for an athlete known for flash, like Michael Jordan, or aggressiveness, like Mike Tyson. However, the aide who described hedge fund manager Monroe Trout in The New York Times as “the Cal Ripken of Hedge Funds” couldn’t have been more right.

Much like The Iron Man set the record for consecutive games played, Trout never missed a day in his 15+ years at the helm of Trout Trading. But showing up is a just small part of Trout’s story. These stats tell the rest:

  • In one five-year period, Trout was profitable in 87% of months.
  • His average annual return during that period was 67%, while his largest drawdown was just 8%.
  • In all months, Trout Trading never had a losing year and posted an average annual return of 21.5%.

Trout’s return/risk measurements are extraordinary, but his methods for achieving them can be followed by any trader. Let’s take a look at a few tactics you may be able to emulate.

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Topics: Trading Basics, Trading Lessons, Market Wizards, Forex, Futures, Monroe Trout

Repeated Failures Made This Trader a Success

Posted by TopstepTrader on February 07, 2018

Does this sound like a recipe for success? 

Get fired from your first job as a clerk at the Chicago Board of Exchange. Get a job as a trader and blow through your stake. Get a second chance and blow through that money, too. Get funded by a friend, but blow through so much of that money they cut you off before you can lose it all.

Probably not, but that’s the early path Larry Benedict took before becoming founder and CEO of Banyan Equity Management, LLC, a firm that managed more than $700 million in assets. Despite his less than promising start, Benedict ultimately strung together an impressive 20 years of net profitability as an options specialist in the XMI index on the American stock exchange for Spear, Leeds, & Kellogg.

You might think the moral of this story is about perseverance, but it’s not. The crux of Benedict’s success was his ability to adapt and learn how to manage risk. In days when market volatility spiked and prices are jumping everywhere, the ability to manage risk is what will keep you in the game. 

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Topics: Trading Basics, Trading Lessons, Market Wizards, Forex, Futures, Larry Benedict

How a Winning Trader Bounced Back from Blowing Up an Account

Posted by TopstepTrader on January 22, 2018

You may not have heard of Linda Bradford Raschke. She is a commodities and futures trader with a career that spans four decades. Throughout her trading career, Raschke prioritized consistency and longevity. That's likely because, like many traders, her first experience trading her own account didn't go so well. 

Like many other floor traders, Raschke got her start with a $25,000 stake given her by another trader. She traded equity options in the pit of the Pacific Coast Stock Exchange. After an auspicious start where she doubled her money in three months, Raschke found herself in a position she thought she understood. As she told Schwager in New Market Wizards, she was short calls in a stock that was a takeover candidate with just one day to go to expiration. The stock was trading $32 and she was fine so long as the stock didn't go above $55. 

Then, the unexpected happened. Another company offered $65 for the shares and Raschke was out her $50,000 — plus another $30,000 as her account went into the debit. 

Instead of sending Raschke into a spiral, the loss only solidified her passion for trading. She was able to get another stake and never let that happen again. Here's how she bounced back to become one of the greatest traders of modern time. 

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Topics: Trading Basics, Trading Lessons, Market Wizards, Forex, Futures, Linda Bradford Raschke

4 Don’ts from a Trader Who Could Move the World's Largest Futures Market

Posted by TopstepTrader on January 09, 2018

You might think Tom Baldwin, investor and founder of the Baldwin Group Ltd, got lucky. In 1982, he left his job as a product manager for a meat-packing firm and leased a seat on the Chicago Board of Trade with just a $25,000 stake. Six years later, he was one of the largest individual traders of Treasury Bonds ($ZB), often trading as many as 20,000 contracts - $2 billion face value - in a single day. And he did this with absolutely no trading experience.

Sounds pretty lucky, right? But here’s the rub: traders have to make their own luck.

Read on for Baldwin’s four tips on how to do just that.

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Topics: Trading Basics, Trading Lessons, Market Wizards, Tom Baldwin

Turning $2,000 to $70,000 in 1 Year - on the Way to Tens of Millions

Posted by TopstepTrader on December 18, 2017

Randy McKay is a name that many traders have likely not heard of. He is one of the rare breed of trader that was able to find success immediately - without blowing up an account or experiencing many of the challenges that even successful traders face. He was able to turn a $2,000 stake into $70,000 in his first year trading currency futures on the floor. That was a short pit stop to making tens of millions during his trading career.

Here are the three pieces of advice he gave traders in Jack Schwager's The New Market Wizards to improve their performance. 

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Topics: Trading Basics, Trading Lessons, Market Wizards, Forex

How Common Sense Helped One Trader Retire in 10 Years

Posted by TopstepTrader on December 12, 2017

By all accounts, Jim Rogers’ career is legendary. He started trading stocks in 1968 with just $600. In 1973, he co-founded Quantum Funds with George Soros, which went on to generate 4,200% returns over 10 years. (The S&P 500 only gained 47% during the same period.) By the time the 1980s rolled around, Rogers had earned enough money to retire from full-time trading.

But it’s not his reported $360 million net worth that makes him exceptional. At least, it’s not the only thing. What really makes Rogers a standout is his common-sense approach to the markets.

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Topics: Trading Basics, Trading Lessons, Market Wizards, Jim Rogers

These 4 Money Management Tips Helped This Trader Build a $5.4 Billion Fortune

Posted by TopstepTrader on December 04, 2017

All trading careers have defining moments. For Bruce Kovner, retired CEO of global macro hedge fund Caxton Associates, it was his third trade that shaped his legendary career.

Kovner started his career as a spread trader - trading the same product across different contract months. Typically, the far month contract trades as a higher price than the front month. But Kovner discovered more forward contracts start trading at near-zero levels, so he bet the difference in price between the two contracts would widen over time. His first trade was textbook and the market reacted how he expected. And while he lost money on his second, it was only because he got in too early.

The third trade shaped how he managed risk forever - and became a reason he’s worth an estimated $5.2 billion today.

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Topics: Trading Basics, Trading Lessons, Market Wizards, Bruce Kovner

23 Invaluable Lessons from the World's Greatest Traders

Posted by TopstepTrader on November 14, 2017

Jack Schwager did every aspiring trader a service when he wrote his Market Wizards series of books. For those unfamiliar, the series is one-on-one interviews of legendary traders like Paul Tudor Jones, Michael Marcus, and Tony Saliba where they share about their challenges in becoming the traders they are today. 

Thanks to Barry Ritholz at The Big Picture, we came across this synopsis of the 23 trading lessons from Simply Options Trading. It's a quick read, so enjoy.

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Topics: Trading Basics, Trading Lessons, Market Wizards

Building $12,000 to $250,000 Over 4 Years, Then Losing It All in 3 Days

Posted by TopstepTrader on November 06, 2017

Like many of us, Bill Lipschutz got his start trading on a small account - just $12,000. Lipschutz had an innate ability and was successful trading from the start, taking four years to build that account to $250,000, compounded growth of 115% annually. 

Then, Lipschutz lost it all. Lipschutz was short equities at the time and had been pyramiding into a substantial position according to New Market Wizards. Then came the Granville Reversal. Joe Granville was a perma-bear and newsletter writer, who put out a call for a stock market crash in 1982. Then in a single session, the Dow went from down 30 points to up 20 points. And just like that the bottom was in and the bear market ended.

In three days, Lipschutz was wiped out.

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Topics: Trading Basics, Trading Lessons, Market Wizards

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